GK AIR Dynamic Pricing on IBM Cloud: A Great Deal for Retailers, Customers, and the Planet

By and Michael Scheibner | 6 minute read | September 20, 2022

Retailers face a constant challenge when it comes to ensuring that the right products are available when customers want them. For example, in the grocery sector, supermarkets must sell off fresh produce before it spoils, and every day, a lot of food that is still good ends up in the trash. This results in a “waste mountain” of 750,000 tons of food every year. With the help of artificial intelligence, Dynamic Pricing from GK Software SE can suggest a sales strategy for retailers which ensures they maximize return on investment, while at the same time giving consumers a good deal and minimizing food waste.

Sales depend on many different factors. Using our Supermarket example, the day of the week influences people’s shopping behavior, and fruits and vegetables are available in various quantities depending on the season. Elsewhere, in fashion, seasonal trends mean that products have a limited viable shelf life. IBM Business Partner, GK Software SE is a German-headquartered developer and provider of standard software for the retail sector and currently counts 22% of the world’s 50 largest retailers among its customer base. Its GK AIR (Artificial Intelligence in Retail) Dynamic Pricing solution enables retailers to take greater control of their inventory, enabling them to price stock in such a way that its attractiveness to customers is optimized.

GK AIR Dynamic Pricing, an as-a-Service offering based on IBM Cloud with IBM Kubernetes and Red Hat OpenShift, brings AI-powered pricing to any environment – on prem, on any cloud and even at the edge with IBM Cloud Satellite – quickly and securely. IBM Cloud is the most open and secure public cloud for business, trusted by many of the world’s leading enterprises to run their most important workloads and together, IBM and GK are enabling retailers to act more sustainably in how they manage the lifecycle of products with limited shelf-life.

“IBM Cloud offers the kind of flexibility increasingly demanded by retail customers. Retailers have mixed requirements for the solutions they own and how – and where – they are hosted. IBM Cloud’s ability to serve retailers needs regardless of their environment is key to our partnership.”

Jens Scholz, CEO, GK Artificial Intelligence for Retail AG

GK AIR Dynamic Pricing applies to brick-and-mortar retailers and e-commerce, using machine learning to account for a wide selection of pricing variables; including current and historical store, inventory and transaction data, company targets, competitor prices, as well as seasonal trends, and regional factors such as weather. GK’s intelligent pricing algorithm determines the optimum price point and sell-off date for products, based on the retailer’s strategy, whether that be margin or revenue optimization or mark-down, ensuring they get maximum return. At the same time, customers receive the best price for the goods and, of course, the more goods are sold, the fewer end up as unnecessary waste.

But, as GK Software Chief Strategy Officer, Michael Scheibner, explains, the real value to customers goes beyond just the technology:

“Our collaboration with IBM brings a holistic solution to retail customers beyond the expertise needed to integrate GK technology on IBM Cloud. IBM continues to invest in GK’s solutions; training practitioners and expanding its capability to create value with our software. Furthermore, IBM is providing advisory services to customers based on years of deep industry expertise, helping customers to optimize their strategy and operations as well as their technology.”

Michael Scheibner, Chief Strategy Officer, GK Software SE

How it works:

AI-supported pricing solutions predict the exact sell-off date for each product based on current and historical demand patterns and inventory levels. Depending on how much the forecast deviates from the target sell-through date (in our example, the date when the product spoils), the intelligent pricing algorithm adjusts the price up or down automatically. How significant this adjustment is in each case is derived from the price sales function for each item. The pricing solution enriches the calculation of the price sales function per item with relevant factors, such as item properties and current and historical transaction data, and sales data. The intelligent algorithms use complex mathematical methods to determine the enriched sales function for each article at any given time. From this, they calculate the current market-driven price for each item.

Instore Check & Price App based on GK AIR Dynamic Pricing

Especially in the case of fresh and expired products in retail, timely sales are important to keep the amount of food waste low. The price plays an essential role in this and GK’s Instore Check & Price App – an extension of GK AIR Dynamic Pricing – enables retailers to control prices from the day products enter the store, pricing food along the product life cycle so that no substantial residual quantities are created.

In-store staff scan products via the app, enter current stock levels and best before dates of items in the shelves and GK’s AI algorithms calculate optimal prices or discounts. This not only leads to a more efficient inventory management process, but also to less food waste because products are sold on time at the ideal price.

The app is particularly suited to any retail scenario where products have a defined expiration date, be it due to perishability or seasonal trends. From food retail to fashion, DIY or pharmaceutical goods, Instore Check & Price helps retailers drive higher sales, less waste and more accurate reporting.

The benefits of GK AIR Dynamic Pricing

Using the Instore Check & Price App, retailers especially in Grocery can reduce waste and avoid losses more proactively with the help of an AI-based & targeted price management. By also creating a data base for the in-shelf stock, inventory and expiration date management is further digitized and improved. Furthermore, the existing and necessary process of checking stock and changing prices is simplified and combined, motivating the staff in store to manage their sales more actively.

But after all, the main benefit of applying Dynamic Pricing is not only the ad-hoc price change in the store, but the possibility to perform price optimization across the entire assortment and product life cycle, starting way earlier than at the markdown phase. This is important for any retailer, especially when looking after NOS (never out of stock) items or when following a sales dramaturgy of changing prices across the whole product lifecycle. This applies especially to industries like Fashion, Luxury and Beauty, where optimizing prices starting from the introduction of a new item, through the high phase of the product life cycle and until the markdown and inventory clearing phase is equally important. No matter the industry, broad and deep assortments add additional complexity and workload to this task and make it virtually impossible for category and pricing managers to look after their complete assortment with the level of detail and in the frequency, they would like or have to. As a demand based and AI-driven price optimization solution, GK AIR Dynamic Pricing helps them to not only automate, but optimize their pricing process, allowing them to focus on strategic decisions and improving their sales KPIs across the board.

To find out more about how GK Software, in partnership with IBM, can help your business, visit www.gk-software.com.

>> Learn more about the partnership between IBM and GK Software SE